|
The Indonesian Stock Exchange (IDX) -- the third best stock
performer in the Asia last year -- expects another solid showing this
year.
This is despite apparent jitters in global markets, in part on fears of
a world economic slowdown.
While this year's IDX composite index may not emulate the 52 percent
growth posted in 2007, the second consecutive year the index grew by
over 50 percent, the nation's economy is strong enough to weather a
slowdown and this is cause for investor optimism.
This was the upbeat assessment shared by president director of the IDX,
Erry Firmansyah, with The Jakarta Post's Agustina Wayansari in a recent
interview.
Erry added that, in addition to the index, solid growth would be seen
in other key indicators, like market capitalization, daily transaction
volume, the number of companies going public and the number of
individual domestic investors.
Last year's 52 percent increase in the index pushed up market
capitalization by 58.69 percent to Rp 1,982 trillion (US$210.85
billion) from Rp 1,249 trillion in 2006.
Daily volume also rose by 138.88 percent, to Rp 4.3 trillion from Rp
1.8 trillion, while companies sold Rp 17.2 trillion in shares to the
public last year, compared with Rp 3 trillion in 2006.
During the interview, Erry highlighted the increasingly important role
that individual domestic investors are playing. The following is an
excerpt:
Question: As compared to other countries in the region, the number of
domestic individual investors in Indonesia is still far behind. Can you
explain more about this?
Answer: Yes, we must admit the number is still very low for a country
of our size. But they are growing in numbers from time to time. At
present, the number barely reaches 1 million, or some 0.5 percent of
the total population.
And that includes investors of mutual funds whose underlying assets are
invested in stocks.
In Singapore, the percentage is around 30 percent. Malaysia already has
4.5 million individual accounts. In China, with a 1.2 billion
population, up to 160 million people are actively trading stocks.
So the number here is very low. But, it also means that the untapped
potential is enormous, considering the size of the country's middle
class.
Why is the number so low in Indonesia? The absence or limited nature of
the network, which is down to lack of manpower and infrastructure. At
present, it's not that easy for people outside Java for instance to be
involved in the stock market.
Another thing is education. We just do not think that there is enough
information about the stock market flowing to areas outside Jakarta,
let alone outside Java.
Against this backdrop, we have been intensifying our efforts in
increasing the channel of distribution and outlets to open up more
opportunities for potential investors. We are cooperating with
securities companies on this.
Currently, we have built 10 outlets across the country. This is our
weapon in educating the public and providing them with information they
need to know about the capital markets. These also have a system to do
transactions. And this year we plan to build to more.
As part of the education program, we have what we call Pojok BEI,
carried out in partnership with stock brokers, which targets points
around the country.
With those efforts, how many more retail stock investors can we expect?
Well, my target is to reach 2 million by the end of this year, and 3
million by the time my tenure ends (June 2009). And I am optimistic to
be able to achieve that.
Because, you can see, domestic investors are rising over the years.
In 2006, out of around Rp 1.8 trillion in daily average transactions,
domestic investors made up some 30 percent. But in 2007 the percentage
reached 50 percent.
Especially now that bank interest rates are on the decline, the stock
market provides a lucrative alternative investment for people with
extra money.
So overall, things look good for the Indonesian stock market? That's
our assessment. Even this year, until February, we've seen an increase
of about 30 percent in average daily volume while many other stock
markets experienced a turmoil triggered by the U.S. mortgage crisis.
We expect this year to have at least 30 companies going public.
On the secondary market, up to 54 firms have indicated plans to issue
new bonds this year. This is good, in order to make our bond market
more liquid. Currently, daily average volume for corporate bonds hovers
at between Rp 250 and Rp 300 billion, which is not bad but still far
lower than for government bonds.
BEI currently lists some 408 firms, following a merger between the
Jakarta Stock Exchange (BEJ) and the Surabaya Stock Exchange (BES) in
late November last year.
|
